Breaking the Vicious Cycle - Part 2

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This is the second blog in a three-part series.

StaircaseThe Vicious Cycle starts with one bad customer experience. That experience leads to customer dissatisfaction. If the company does nothing to make amends or improve its customer experience, the customer defects. That customer tells other customers. The company loses customers—and money. In turn, the company cuts costs in customer care, which worsens the customer experience. And down it goes from there. Poor customer experiences cost companies customers and revenue. Here is step two in breaking the Vicious Cycle.

Step Two: Make the Transition

Don’t get me wrong. We know that taking the steps required to break the Vicious Cycle can be hard. We also know that companies that don’t change won’t survive. We have worked with organizations across the globe, and in our experience, we typically see companies at one of these four levels of readiness for change:

Endangered species: Typically, these are the old timers that are unaware and are not taking any steps towards change. We believe that these companies have a limited life expectancy.

Eye openers: Companies that have pulled their heads out of the sand and are beginning to explore new ways to improve their customer experiences. They are starting to view customer experience improvements as an investment, not a cost.

Transformers: These companies are exploring ways to re-architect for the new world. They are looking at on-premise and cloud-based options to knit together the pieces of an integrated customer experience across departments and channels.

Innovators: These are usually new-line companies that are already wired for success. Often native to the Web, these companies are leading the pack. They leverage real-time analytics to respond to their customers’ changing behaviors and needs. But, be careful; these companies must continue to innovate to stay ahead.

We are beginning to witness changes across industries. The “remove obstacles” strategy of breaking the Vicious Cycle works for any type of business. Icons like Amazon and Zappos have an advantage because they operate only on Cyber Street. Back on Main Street, customer experience leaders like USAA, Southwest Airlines, and Apple have all extended the “make it easy” philosophy across their customer channels. Let’s look at a couple of examples:

Logitech, a global manufacturer of personal technology products and video communication solutions, offers a wide range of products from high-end, differentiated offerings all the way to entry computer peripherals. At the low end, Logitech competes in a commoditized marketplace; there is often perceived parity in features and value, so the only sustainable differentiator is the customer experience.

Acting on this knowledge, Logitech began to invest in improving its customer experience, partnering with TTEC to accelerate its strategy. Logitech consolidated all of its tech support functions globally with TTEC and focused on streamlining processes across all service channels, including voice, e-mail, chat, and social communities. Simplifying the tech support process made Logitech’s customers happy. The company experienced a 70 percent increase in Net Promoter® score. In addition, their average handle time was reduced by 25 percent in some regions.

Another example is big box retailer Costco. Its strategy is brilliant. First, the retailer focuses on convenience. It finds locations that provide easy access and have ample parking. Next, the company limits the SKUs it sells. Costco doesn’t overwhelm its customers with incremental choices. It sells only the top-ranked products in each category offering the best value for the price. For categories that require in-depth knowledge, Costco staffs accordingly with experts.

And the last piece of brilliance: Costco has a no-risk return policy. If customers aren’t satisfied with a product they’ve purchased, they can bring it back. Money returned no questions asked—no obstacles. It’s no surprise that Costco continually has among the highest Net Promoter score in retail, and is ranked as one of the top U.S. employers. Costco consistently grows revenues and profits year over year.

Stay tuned for part three next week.